Written Commentary
STOCK INDEX FUTURES
Stock index futures advanced after yesterday’s release of the Federal Open Market Committee’s statement and Fed Chair Powell’s press conference.
The Federal Reserve on Wednesday held its fed funds rate unchanged at 5.25% – 5.50% and made no changes to its forecast that it will be necessary to lower interest rates three times in 2024. The increase in monthly inflation numbers did not deter Fed Chair Powell’s message that price pressures will continue to ease or that it will likely be appropriate to lower rates.
Jobless claims in the week ended March 16 were 210,000 when 209,000 were expected.
The March Philadelphia Federal Reserve manufacturing index was 3.2 when -5.0 was anticipated.
The 8:45 March PMI composite is forecast to be 51.5.
The 9:00 February existing home sales report is estimated to show 3.920 million, and the 9:00 February leading indicators report is expected to be -0.3%.
The fundamentals are mostly bullish, while the technicals remain supportive to stock index futures.
CURRENCY FUTURES
The U.S. dollar index declined yesterday in response to the Federal Open Market Committee’s statement and Fed Chair Powell’s press conference. However, there is some recovery in the greenback today.
The HCOB German Flash Composite Purchasing Managers’ Index improved to 47.4 in March from 46.3 in February. This compares to forecasts of an increase to 47.0.
The Bank of England maintained its bank rate at 5.25% at its policy meeting today. The Monetary Policy Committee voted by an 8-1 margin in favor of keeping rates unchanged, with one member advocating for a 25 basis point decrease.
The Swiss franc fell to an eight-month low after the Swiss National Bank reduced its key policy rate by 25 basis points to 1.50% in a surprise move that made it the first major central bank to ease monetary policy. This is the first cut from the SNB in nine years.
INTEREST RATE MARKET FUTURES
Michael Barr of the Federal Reserve will speak at 11:00.
Financial futures markets are predicting there is an 8.0% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the May 1 policy meeting, and there is a 92.0% chance that the Fed will keep rates unchanged.
The bullish influence of yesterday’s Fed news is likely to be short-lived.
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